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ESG

Regulation (EU) 2088/2019 (“SFDR Regulation”) provides that financial market participants and financial advisors are required to integrate the sustainability risk assessment.

The sustainability risks are defined in art. 2, no. 22) of the SFDR Regulation, as events or conditions environmental, social or governance type which, if they occur, could result in a significant actual or potential negative impact on the value of the investment.

In particular:

  • the risks of environmental sustainability are attributable to climate change, emissions of carbon dioxide, air pollution, water pollution, damage to biodiversity, deforestation, energy inefficiency, bad waste management practices, increased water scarcity, sea level rise / coastal flooding and fires;
  • the risks of social sustainability refer to violations of human rights, human trafficking, modern slavery / forced labor, labor rights violations, child labor, discrimination, restrictions or abuses of consumer rights, limited access to clean water, to a reliable food supply and / or a sanitary living environment and violations of rights of local communities / indigenous people
  • governance sustainability risks are associated with a lack of diversity at the level of board of directors, inadequate internal or external audit, violation or limitation of rights of (minority) shareholders, corruption, lack of control over the remuneration of executives, poor guarantees on personal data / IT security (of employees and / or customers), discriminatory work practices, health and safety issues for the workforce, bad sustainability practices in the supply chain, harassment in the workplace, discrimination and bullying, restrictions on collective bargaining or trade union rights, inadequate protection for whistleblowers and failure to meet minimum wage requirements or (if case) of living wages.

 

Sibilla Capital Management follows the guidelines of Regulation (EU) 2088/2019 (“SFDR Regulation”) for the Ucits funds it manages. The regulation looks at investment decisions in a wider context than traditional financial analysis and explicitly includes analysis of a range of risks and opportunities related to environmental, social and governance (ESG) drivers. In principle, this can lead to a more broad assessment of the environment in which companies operate and their performance in managing different stakeholders, giving a fuller understanding of future opportunities and risks than traditional fundamental analysis. In practice, its effectiveness in doing so hinges on how that integration is approached and implemented.

We seek to integrate ESG considerations into our research and overall investment decisions across investment desks and asset classes. We recognize that different asset classes, portfolio strategies and investment universes require different lenses to most effectively strengthen decision making.

Sibilla Capital Management, as part of its investment decisions, evaluates and manages the risks of significant sustainability and the impact of these risks on the value of the investments made.

We consider it important to integrate sustainability risks within the assessment of the overall risk associated with a potential investment. Taking the aforementioned into consideration risks in investment decision making, the intention of Sibilla Capital Management is to manage sustainability risks in such a way that they have a limited impact on return of the Fund.

Our integration approach spans the breadth of the investment process, from identifying trends, analyzing securities, constructing portfolios, through to engagement and reporting.

We facilitate the integration of ESG into the overall investment processes through the following:

  • Our analysts work with investment team, which facilitate regular dialogue with our investors.
  • Our investment analysts have a sector focus. This enables us to gain a deep understanding of sector-specific ESG issues and in turn, work in tandem with our portfolio manager to identify and assess ESG risks and opportunities, as well as incorporate consideration of these factors into our company models where appropriate.
  • Our equity analysts analyse relevant ESG risks and opportunities for securities under their coverage within their research notes. Our portfolio manager reviews research notes periodically to highlight where ESG analysis can be enhanced and to promote best practice.